Ashwin Navin, chief operating officer of BitTorrent:
For Technology Guardian, Oct 19, 2006.
By Kate Bulkley
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Ashwin Navin, chief operating officer of BitTorrent, explains why DRM is bad news, how BitTorrent will save the net from itself, and whether the peer-to-peer protocol is good or bad news for content makers.
Kate: BitTorrent is considered by most content owners, including broadcasters and studios [here at the Mipcom TV market], as a scourge because it encourages the illegal sharing of content through peer-to-peer technology. How do you respond to that?
Ashwin Navin: BitTorrent grew because people were using it to publish unlicensed TV shows and music and, big surprise, people like to download TV shows and movies and music, so now we’ve got 80 million people out there that have the software. All of these people care about content and they want to see it on their PCs and other digital platforms. The idea now is to convert this user base into paying customers. BitTorrent was never specifically designed for the purpose of stealing content but it was specifically designed to deliver content efficiently and if we can be a distributor of content using our tools we can be more efficient than all of our competitors. Hopefully that will mean more margin for the publishers and better quality for the consumer.
Kate: That sounds good but a lot of people would say peer-to-peer networks and content protection are oxymorons, they don’t really go together.
AN: That is sort of an uniformed opinion. Five years from now we will be laughing about that because every service online uses some kind of peer-to-peer delivery. As file sizes get richer and bigger, P2P is fundamentally the only way to deliver the content on the internet without breaking the internet itself. BitTorrent doesn’t get in the way of content protection. It is actually a separate layer. So we need to deliver files that are copy protected and have various business models associated with them. These could be files that are purchased on an upfront payment for a perpetual license or rented for a temporary license or they could also trigger a report that someone has watched it so an advertiser can be billed. But this layer is entirely separate from the way we deliver the content.
Kate: This all sounds very rational and grown-up and is the future that you are trying to invent for BitTorrent but when BitTorrent was founded in 2001 by Bram Cohen it was a very different story…it was more of a Napster, I mean the original Napster, of course.
AN: Actually from the day Bram founded BitTorrent it was a web-publishing tool and very controllable and distinct from other layers of service and technology that would be required to make it viable. Bram Cohen committed the grave crime of giving away this very powerful tool for free! (Laughs) Anyone would consider that a crime because he never benefited from its use. Now that we have got this large number of users on BitTorrent we think there is huge commercial value in becoming a distributor of content. Just to be clear, file sharing is one application of P2P. Napster, Grokster and KaZaa basically made a directory available to the public in exchange for everyone else’s directory. BitTorrent doesn’t work that way at all. BitTorrent uses P2P as a means to an end, so it is completely invisible to the user. The content is on the web and I click on it but P2P is behind the scenes. So just like Skype uses P2P behind the scenes to do VoIP, we use it behind the scenes. So there is no ability for me to search other people’s hard drives with BitTorrent.
Kate: Let me ask you a different way: how many users are using it now and what are they doing?
AN: At this moment there are probably 80 million people on line with the software and according to the MPAA it is almost 1 billion movies a day that are being downloaded. TV, software and video games are all additional.
Kate: So all that content is being stolen using the BitTorrent technology. AN: Yes.
Kate: Well, 80 million users. Sounds like a pretty big market to me. So why haven’t you been bought by Google? Given the $1.6 billion Google just laid out for YouTube, they seem to like sites that have lots of traffic and usage and without a profitable business model.
AN: I think as we demonstrate the commercial value of our tools that the shareholder value for us and for our investors is going to be tremendous. I think there will be a range of options for us whether it’s an IPO or a buyout. We’re building BitTorrent to be a standalone, successful and profitable entity.
Kate: You sound like the banker that you used to be! You joined BitTorrent in 2004, three years after Bram has founded the company. You essentially came into the company to create a business model, correct?
AN: Well, let’s just say that before I joined Bram had a phenomenally successful t-shirt company! That wasn’t a bad existence for a guy with a couple of kids. He had a healthy amount of income and it took a certain amount of convincing to actually point him in the direction of a commercial entity.
Kate: BitTorrent was a t-shirt company?
AN: The only way BitTorrent was getting money was through donations and selling t-shirts. So, if you liked BitTorrent, you could send in a donation and if you wanted a t-shirt you could buy one. Bram was earning a healthy six-figure income.
Kate: So how did you convince him to ditch the t-shirts?
AN: He was interested in my experience at Yahoo! where web monetisation was something that we lived and breathed (Editor’s note: Navin worked at Yahoo for two years prior to joining BitTorrent). I was interested in the elegance of the BitTorrent tool and the fact that it solved some problems that even Yahoo! faced. That’s how I discovered BitTorrent. Yahoo was interested in digital distribution and we were always trying to figure out whether Yahoo needed to be a link aggregator like Google or if we needed to actually host the content. BitTorrent actually makes a lot of the problems that you face when you host the content irrelevant because hosting content is very expensive and when you insert BitTorrent into the equation you reduce the cost substantially.
Kate: Your point about cost is well taken. YouTube has all that traffic but the more traffic they get the more it costs them.
AN: Exactly. It doesn’t scale. People have done the math on YouTube’s 100 million video downloads a day and whatever the number is, and it’s a big number, it’s really great news for BitTorrent because fundamentally more data being delivered from a website is good for us because we have a perfect solution to that problem.
Kate: The judicial system in the US has taken a rather dim view of peer-to-peer networks, in fact Grokster is out of business now. Why is BitTorrent still around?
AN: Grokster was a weird decision but everyone sort of took the view that although Grokster lost it was a very ambiguous decision. It was sort of like the pornography decision. There was no mandate handed to the entertainment industry. There was no mandate handed to the technology industry. It was essentially a smell test. If your technology looks like it was designed for illegal purposes you’ll be held libel for it. So it is a very ambiguous standard. It’s kind of like the pornography standard, I can’t define it but I know it when I see it and that is basically what the court handed down. From the beginning of BitTorrent, Bram vociferously discouraged the use of BitTorrent for piracy and warned users that they there is no anonymity; there were warnings on the site telling people who used BitTorrent to publish pirated music and other content to their websites had a big, red target on their foreheads. Now about 90% of those people have been sued. So there’s a clean bill of health as far as BitTorrent is concerned.
Kate: So far you have fallen under the legal radar. Is it just because you haven’t encouraged piracy even though you facilitate it?
AN: Well I wouldn’t say we have fallen under the radar. I’m sure that people have taken a pretty good look at the way our code is written and whether in our messaging we have financially benefited from piracy. And the answer is BitTorrent has never put itself in any considerable legal risk. Now that we have the goal in mind to make money the right way by licensing and selling content, I think this has been warmly welcomed by the entire industry.
Kate: So the plan is to license content and sell it but what about monetising the traffic you have? You already have some advertising. How is that going?
AN: Advertising is not what we are hanging our hat on. BitTorrent does have a lot of traffic and we make some money from advertising but that’s not where we think we’ll be wildly profitable.
Kate: So the wildly profitable part means you need to license content and so far you’ve signed a licensing deal with one studio, Warner Bros. But you haven’t actually started offering any paid-for content yet, why’s that?
AN: What we want to show the world is that BitTorrent is the most efficient way to deliver content and there are attractive legal purposes for it. The second phase beyond that is to take the core component of the BitTorrent delivery system and make it available for a fee for anyone who has a website and wants to deliver content efficiently.
Kate: And why is the Warner Bros deal the only one you’ve signed so far? Are you still proving the technology?
AN: We haven’t announced any other deals but we’ve been quite successful working with all the other studios. It’s just a matter of the commercial terms that make sense for us. Clearly the more opinions you have, the more time it takes to get deals done. People who are rushing into this market are not doing the industry any favours because the studios have got to hear that there is pricing that is appropriate. They need to allow users to do things with the content and companies like Apple have strong opinions and Google has strong opinions. We expect this to be an evolutionary process on behalf of the studios. But by rushing into this you are not doing the studios or consumers or yourself any favours.
Kate: Apple has licensed some big blockbuster TV shows like Lost and Desperate Housewives on the iPod. There’s lots of other content on other sites, more each day. Why wait or is it a case of you not being able to get the deals you need?
AN: The idea is to get a comprehensive catalogue. That is part of the good user experience we want to offer. We also want to offer high-quality, fast downloads so it is a good experience to discover not only major content but also independently-created but high-quality content. Getting that good user experience doesn’t happen overnight.
Kate: So you are still working on the technology. Clearly a big part of that is the copyright protection software. I know as well as you know that no digital rights management software in unhackable. So how do you convince the Warner Bros of the world that you can protect their programmes?
AN: There will never be a DRM system that works. It’s sort of like expecting a $75 door lock to protect all your valuables. Fundamentally you’ve got to get to a speed bump that works for 90% of the users. Ten percent of the users may have the interest and time to break something that is available for sale for $1 but most people aren’t going to bother with that. Over time, we think DRM becomes lighter weight and less intrusive and the incentives to break it go down. That’s what we’re encouraging the whole industry to embrace a less intrusive and less proprietary way to protect there content. At our launch we are using Windows DRM, which is the accepted standard today. We’re always looking for a standard that is independently created cross platform and the studios are as well, especially when they see that Apple and Microsoft are starting to exert their control and lock in users. The whole idea of DRM is going to be questioned at that point. The studios have resisted lock in from everyone from Comcast on, so this is the next hurdle for them, to avoid being strangled by the DRM that they are so attached to today.
Kate: So what’s the solution to having Apple or Microsoft dictate terms?
AN: I think the next phase is about DRM free. It will be like the watermarked approach so that content is labelled as mine and the process of putting it up on a P2P network is not attractive because I paid for it and so others should probably pay for it, too. Do I want something with my name on it all over the web? No. So that can be a pretty effective form of copy protection.
Kate: That’s all well and good but isn’t there a race on right now as sites like yours and Apple’s and many others – even those run by the studios themselves- try and round up the right content and the lion share of users and become the next big thing?
AN: Yes there are definitely a lot of people trying to get into this business. And there are different models like Guba.com, which is a streaming site so they don’t have the peer-to-peer benefit but they do have the adult business and they’re got a lot of servers! But strictly speaking, there is no perfect competitor to BitTorrent. Clearly Apple and Amazon are selling video, but longer term we are happy that there are people coming to market with these offerings because we think our longer-term business is purely content delivery. The idea is to take our secret sauce and make it available to people who are successful in this business because they will need it to push the quality of their services and to manage their costs. So no matter who’s successful, BitTorrent wins.
Kate: It sounds like you may not be in the retail business yourselves for very long, but what is your view on the pricing for these kind of offers? I mean your 80 million users are getting this stuff for free now.
AN: One of the things that seems to be proven is that consumers need a consistent pricing framework. The pricing needs to be commensurate with the value proposition of getting a digital download and so we are learning from others. We haven’t announced our own pricing yet. We are shaping that up.
Kate: How much content do you need to have before you launch the paid-for service?
AN: It’s a marketing and programming decision. We think we know our users very well and we have an interesting curatorial and editorial process. The idea is basically a combination of professional and community curation. We’re facilitating and enhancing this experience with our own efforts but we think the community will eventually take over. This requires us to be comprehensive in the content we bring to the service.
Kate: Are you talking about user-generated content?
AN: No. What I mean is the community acting as editors. There are really three ways to curate. One is professional which is us and one is through ratings from users and the third is technology-based, which is basically a recommendation engine that learns from what you like. We are building that. It’s one of the things that Bram thinks a lot about. He’s been looking at recommendation systems for several years and has built some interesting technology. Clearly some of the user interfaces on Google Video are very difficult and users are struggling and publishers are struggling and they are not getting the appropriate branding and so aren’t connecting with their users. A video store cannot look like web search. It needs to be a richer experience that brings people they might not even know they want yet.
Kate: What about user generated content? Will you encourage it and try to become YouTube 2?
AN: We care about the users who have created the content, not necessarily the people who have posted content that they haven’t created or which they don’t own. Right now we have a submission tool that allows people to submit content on an invite-only basis. We’ll probably open that up to the public when we have set the right tone and people feel like they will be using it for the right purposes.
Kate: So controlled UGC. Sounds like you don’t see it as the future, which is interesting given that only a few days ago Google spent $1.6 billion to buy YouTube.
AN: People use BitTorrent to post UGC to their own sites and then our webcrawler picks it up. So instead of allowing people to post to their own sites we are going to allow then to post to our site as well and therefore we hope to have a better connection with the artists and the file sharers. One thing about BitTorrent is we are all users as well…
Kate: and all under the age of 25 no doubt?
AN: Well I think the average age of BitTorrent staff is 29. But we in a sense don’t need to do endless focus groups because we are the focus group!
Kate: You say you are moving to a paid content model, but why will anyone pay for content that has been free?
AN: Thirty percent of our users say they would be willing to pay for content. It’s a very high number and in terms of what they would be willing to pay, these are the things that we are trying to dial in right now. This is again where we have to use ourselves and friends as well as competitive forces as well. We learned a lot from Apple, which has this very captive audience with an end-to-end, locked-in approach. So we feel we need to embrace partners on both sides of us, on the content side and the hardware side. So in the next year or two part of the execution plan is to invent BitTorrent on other devices beyond the PC.
Kate: Why will I go to BitTorrent for my content? Why won’t I go to Aol.com or abc.com or innertube.com, the CBS video site. Why will I choose BitTorrent?
AN: No one is going to those sites today and everyone is using BitTorrent so that is a pretty good start. We have brand awareness. We have users. We have built in behaviour pattern and an association with high-quality digital content. That’s a good starting point.
